Northern Gateway a must?

[Wilber]

The company and Alberta and/or the feds are already expecting to cover all of these costs. All BC needs to do is provide oversight to ensure it meets their needs. Everyone involved in this debate wants to address legitimate environmental concerns. The problem are the arrogant activists who think they are entitled to reject all pipelines.

Let's see what infrastructure for dealing with a major spill they plan on having in place by the time this line goes into operation. Just promising to pay cuts no ice. Waiting till after the fact is not good enough.

[Wild Bill]

I think what you're overlooking is BC's underground pot industry without which BC would also be a have-not province.

You've got hydro in Ontario too so I fail to see why you shouldn't also be so lucky. Maybe it's something about people's attitudes on the coast; you need to be a little more self-sufficient or resistance seems a little less futile so far away from Ottawa, I just don't know.

We've got hydro? Yeah, but like always its not that simple. We just finished a zillion dollar project drilling and boring through the bedrock at Niagara Falls. This means an extra 1.6 Billion kilowatt hours annually added to the grid.

http://www.opg.com/power/hydro/new_projects/ntp/index.asp

However, the grid is too old and clunky to take that power! There was a 116 million dollar project for new transmission lines that has been blocked by the natives at the Caledonia protest.

http://www.thespec.com/news/local/article/495600--sparks-fly-over-caledonia-hydro-line

Of course, McGuinty says we don't need the lines anyway. If that were so, then why in hell did we spend 116 million dollars, plus the Niagara Falls expansion that we can't use?

Now this situation is bad enough due to politics. There are many sites in Northern Ontario that can generate electricity from hydro but the grid of transmission lines to bring that power down south is not suitable and most of them would be blocked by natives anyway.

So meanwhile our provincial government pays people 80 cents per kilowatt hour for solar power, subsidizing the difference since mainstream power costs about a nickel. Wind and solar can't be relied upon to always be there and can't be stored. So when they aren't producing we buy power from the States. When we have an excess we have to dump it somewhere so we offer it to the Americans. Usually at those times they don't need it so we have to pay them to take it!

It's a real dog's breakfast eyeball. The problem is that we have politicians who only care about attracting the "green vote". Since green voters tend not to be deeply technical they don't understand the technical screwups. The government gets its photo ops and really couldn't care less that the approaches have not worked and cost taxpayers a zillion dollars in total.

What else is new?

[TimG]

Let's see what infrastructure for dealing with a major spill they plan on having in place by the time this line goes into operation. Just promising to pay cuts no ice. Waiting till after the fact is not good enough.

The pipeline is not going to be built in a day. BC can make it a condition of acceptance that the infrastructure must be in place before the first ship leaves port.

Bottom line: there are plenty of reasonable demands that BC can make to ensure their coastline is protected.

What is unreasonable is a refusal to accept any pipeline under any terms. People who take that attitude are real problem here.

Edited August 5, 2012 by TimG

[Wilber]

The pipeline is not going to be built in a day. BC can make it a condition of acceptance that the infrastructure must be in place before the first ship leaves port.

Bottom line: there are plenty of reasonable demands that BC can make to ensure their coastline is protected.

What is unreasonable is a refusal to accept any pipeline under any terms. People who take that attitude are real problem here.

What infrastructure? I haven't seen any proposed.

[TimG]

What infrastructure? I haven't seen any proposed.

Spill management plans are part of the proposal. BC is within its rights to make counter proposals. The trouble is constructive discussions are impossible as long as the yahoos insist on no pipeline under any conditions. Edited August 5, 2012 by TimG

[Argus]

Those regulations are for the Port of Vancouver, not the Straights of Georgia and Juan de Fuca or the

Salish Sea as the PC now call it.

So extend them. They sound a mite paranoid to me, but what the heck.

Who will pay is only part of it. If the infrastructure isn't in place to rapidly deal with a spill, no amount of money will be enough.

According to the cite I posted earlier much of the infrastructure is already in place, pre-positioned for a possible oil spill. If more needs to be added, then require that be done.

And why should we have to look after all that stuff, it is not we who want this thing

You don't have to look at anything as long as you want to trust others to do it for you...

The fact is, as I've posted, the lack of an external outlet is already costing our economy (which includes you) $20 billion a year. That's a lot of economic activity, and a lot of taxes to piss away because we can only sell to the midwest US. And the number is only going to get higher as more production comes on line.

You're on the coast. There are benefits and costs to that. Port facilities to ship goods out and bring goods in are both. They bring a lot of jobs and a lot of economic traffic to you, but the flip side is you can't refuse to let others export goods. You can only make certain the transportation is done as safely as possible.

Edited August 5, 2012 by Argus

[eyeball]

At this point I think NG should be rejected and in favor of the Vancouver route. The oil just has to get to the coast. It does not really matter which pipe is used.

What really matters is the manner in which they are constructed, especially within and around fish bearing ecosystems. Mega-projects such as these have been notoriously damaging to salmon and salmon dependent communities in BC and I think BC's starting position should be that Ottawa immediately reverse every change it made to our fisheries protection legislation and in fact make it stronger and expand it's scope. I'd have to insist on tunnelling the pipes under every river, creek and stream that's in their path.

But further to the above and before the first stone in the construction of any new pipeline is even turned...

Oil companies put up the costs of three major spills like the Exxon Valdez at minimum up front before a single length of pipe is laid. I'd use the costs of the Exxon Valdez spill to date, as the starting point (adjusted for today's dollar) for determining what the size of that fund will be.

[waldo]

Spill management plans are part of the proposal.

oh... really!

just what risk cost is Enbridge assuming - exactly what risk cost?

Is B.C. being hung out to dry

?

... there is currently no guarantee that the project will have sufficient ‘leak and burst’ insurance. In fact, it might not have any insurance, as this appears not to be a requirement for the project.

Second, it is possible that there will not be any company money to deal with a major spill, as the project’s financial plan states that any profits will be distributed annually as dividends to the shareholders (unit-holders). Money will not be retained or reinvested in the company.

Finally, the Northern Gateway project is structured as a limited liability partnership (LLP). Enbridge intends to own only half of the project. Rights to the rest of the units are being sold to a number of companies, including Sinopec, a national oil company owned by the Chinese government. One unit was reserved for First Nations participation in the project.

LLPs are not an unusual structure; they make it easier to secure financing and can protect investors from tax and other obligations, such as the inability of Northern Gateway to pay for liabilities. However, with assets consisting solely of the pipeline and the marine terminal, says Allan, Northern Gateway is unique as a stand-alone project. As an LLP that will have no cash, very few assets, and little to no insurance, this project is a threat to the public purse.

[WWWTT]

The pipeline is not going to be built in a day. BC can make it a condition of acceptance that the infrastructure must be in place before the first ship leaves port.

Bottom line: there are plenty of reasonable demands that BC can make to ensure their coastline is protected.

What is unreasonable is a refusal to accept any pipeline under any terms. People who take that attitude are real problem here.

Here's an idea.

Build the pipeline to Ontario and the rest of eastern Canada where that oil can actually help Canada in more than one way!

This line of thinking is called "killing more than one bird with one stone"

First eliminate many of the subsidies the oil companies get.Then use that money and more tax payer dollars to build the much needed connecting east/west pipeline as part of our infrastructure restructuring program.

It won't be cheap and it will take years but it will benefit Canadians for generations.

If any do not believe me then look at Brazil.

During the 70's and 80's Brazil went through a similar mega energy infrastructure project.

However it involved the production of ethanol from sugar cane and required a huge investment that saw no return for a few decades!Also I believe there had to be laws passed to change the specs of car/motorcycle engines to accommodate the use of ethanol.

Many investors were furious and even many Brazilians too and from what I understand this investment hurt the country for the short term.

Despite the difficulties, Brazil is now the leader in world ethanol production and this has helped their booming economy!

WWWTT

[Wild Bill]

If any do not believe me then look at Brazil.

During the 70's and 80's Brazil went through a similar mega energy infrastructure project.

However it involved the production of ethanol from sugar cane and required a huge investment that saw no return for a few decades!Also I believe there had to be laws passed to change the specs of car/motorcycle engines to accommodate the use of ethanol.

Many investors were furious and even many Brazilians too and from what I understand this investment hurt the country for the short term.

Despite the difficulties, Brazil is now the leader in world ethanol production and this has helped their booming economy!

WWWTT

You do realize that ethanol has been causing more and more hunger and starvation, as land and crops like corn are used for ethanol production instead of food?

There ain't no such thing as a free lunch! Everything interconnects with everything else.

[TimG]

Build the pipeline to Ontario and the rest of eastern Canada where that oil can actually help Canada in more than one way!

Oil is a fungible commodity. There is ZERO benefit to be gained by spending more money to build a longer pipeline to Ontario.

First eliminate many of the subsidies the oil companies get.Then use that money and more tax payer dollars to build the much needed connecting east/west pipeline as part of our infrastructure restructuring program.

Oil companies are NOT subsidized.

Despite the difficulties, Brazil is now the leader in world ethanol production and this has helped their booming economy!

The relative success of ethanol is because of the unique nature of Brazil (tropical climate, efficient sugar production and large amounts of land). It is not a general model that can be adopted everywhere.

[eyeball]

Oil is a fungible commodity. There is ZERO benefit to be gained by spending more money to build a longer pipeline to Ontario.

You clearly don't know what you're talking about, because, as I've told you before, your way of economic thinking is severely limited when you insist on not incorporating the real world into it. The benefit will be that we wouldn't have to lose anywhere near as much natural capital by piping our oil to Ontario. The ecosystems between Alberta and Ontario are just nowhere near as sensitive to pipelines. By the simple measure using dollars and cents alone I think it could be argued that the 'real estate' going west is simply worth a lot more and therefore we should utilize less expensive land so we can continue to derive greater...benefit...from the the more valuable.

Kapeesh?

Edited August 6, 2012 by eyeball

[msj]

oh... really!

PDF Link

there is currently no guarantee

that the project will have sufficient ‘leak and burst’ insurance.

In fact, it might not have any insurance, as this appears not to be

a requirement for the project.

Second, it is possible that there will not be any company

money to deal with a major spill, as the project’s financial plan

states that any profits will be distributed annually as dividends

to the shareholders (unit-holders). Money will not be retained or

reinvested in the company.

Finally, the Northern Gateway project is structured as a

limited liability partnership (LLP). Enbridge intends to own only

half of the project. Rights to the rest of the units are being sold

to a number of companies, including Sinopec, a national oil

company owned by the Chinese government. One unit was

reserved for First Nations participation in the project.

LLPs are not an unusual structure; they make it easier to

secure financing and can protect investors from tax and other

obligations, such as the inability of Northern Gateway to pay for

liabilities. However, with assets consisting solely of the pipeline

and the marine terminal, says Allan, Northern Gateway is

unique as a stand-alone project. As an LLP that will have no

cash, very few assets, and little to no insurance, this project is a

threat to the public purse.

Wow, just wow.

If I was the BC Gov't I would be demanding the following:

1) The existing conditions already asked for by Clark (which are still a bit vague, imo).

2) The condition that the project run through Enbridge (as in the operating company) and not through any kind of subsidiary. Especially not run through a LLP structure which is specifically designed to limit liability.

3) Demand that Enbridge produce an insurance confirmation each year to BC so BC taxpayers know that the insurance coverage is adequate (this is a pretty easy to comply with - I get insurance confirmations all the time when I do audits of companies, not-for-profits, and FN bands).

[TimG]

The condition that the project run through Enbridge (as in the operating company) and not through any kind of subsidiary. Especially not run through a LLP structure which is specifically designed to limit liability.

I agree with your other points (frankly I am skeptical that Enbridge is actually so dumb to think it could get away without such conditions - it would not be the first time that reporters simply made crap up). but there is really no way around separate LLC as long as native groups have to be bought off with ownership in the project (i.e. Enbridge cannot give its own shares away to native groups - it can only give shares of a company created for the project).

[msj]

I agree with your other points (frankly I am skeptical that Enbridge is actually so dumb to think it could get away without such conditions - it would not be the first time that reporters simply made crap up). but there is really no way around separate LLC as long as native groups have to be bought off with ownership in the project (i.e. Enbridge cannot give its own shares away to native groups - it can only give shares of a company created for the project).

Huh?

Why not?

Companies buy their own shares all the time.

Why can't it buy shares and give them over to the Natives?

Why can't it issue redeemable preferred shares with an annual dividend based on the NG's audited segmented income per year?

Why can't it negotiate a different deal with the FN's than ownership?

There are lots of ways to negotiate this deal but Enbridge, along with Alberta and the Feds, want to sell out BC's environment at the lowest price, using the easiest method, while implementing minimal safeguards.

[waldo]

Oil companies are NOT subsidized.

and there it is - again... and again... and again! Clearly, shilling for the fossil-fuel industry is one of your principal fortes! As I recall the last time we danced this nonsense, MLW member, 'Peeves' pointedly asked you a question - one you quite conveniently dodged:

and, of course, you continue to ignore the direct question/challenge to you as to why fossil-fuels should continue to receive subsidies, notwithstanding the disproportionate amount of fossil-fuel subsidies as compared to those for renewable alternatives. Just answer the question TimG... just answer the question - is there a problem?

Bloomberg New Energy Finance: Fossil fuel subsidies are 10 times those of renewables ... International Energy Agency (IEA) - $557bn was spent by governments during 2008 to subsidize the fossil fuel industry

I have always said the real subsidies to fossil fuels should be eliminated but they are so small when measured per kWh they will have no effect on consumption. The problem is you insist on

claiming that many legitimate tax deductions are "subsidies" and are looking to use the tax code to penalize fossil fuels

.

Any financial concession that avoids real taxes regardless what program, regardless what it's called is in fact a subsidy is it not?

(waldo: emphasis added)

notwithstanding you trotted out your perpetual fallback to, 'per kWh' (which you've been soundly trounced on), notwithstanding the true direct subsidies BigOil receives, let me take the liberty to quote from the World Trade Organization (Agreement on Subsidies and Countervailing Measures) as to when subsidies actually exist:

1.1 For the purpose of this Agreement, a subsidy shall be deemed to exist if:

(a)(1) there is a financial contribution by a government or any public body within the territory of a Member (referred to in this Agreement as “government”), i.e. where:

(i) a government practice involves a direct transfer of funds (e.g. grants, loans, and equity infusion), potential direct transfers of funds or liabilities (e.g. loan guarantees);

(ii)

government revenue that is otherwise due is foregone or not collected (e.g. fiscal incentives such as tax credits)

(1);

(iii) a government provides goods or services other than general infrastructure, or purchases goods;

(iv) a government makes payments to a funding mechanism, or entrusts or directs a private body to carry out one or more of the type of functions illustrated in (i) to (iii) above which would normally be vested in the government and the practice, in no real sense, differs from practices normally followed by governments

[Shady]

Governments are more supportive of fossil fuel subsidies because that industry actually makes them a substantial amount of money. There is a large return on their investment. Not so with so-called renewable energy. It's basically like throwing money down a hole.

[Argus]

Oil companies put up the costs of three major spills like the Exxon Valdez at minimum up front before a single length of pipe is laid. I'd use the costs of the Exxon Valdez spill to date, as the starting point (adjusted for today's dollar) for determining what the size of that fund will be.

I don't think that's reasonable. The Valdez was an old, single-hulled super tanker with faulty equipment and a drastically overworked crew which was not inspected by the Coast Guard as it was supposed to be.

Given the likely proposal will be something similar to Vancouver (two local pilots, new double hulled ship inspected before loading, attached to three tugboats working only in calm seas) the odds against any kind of serious accident would seem to be enormous. Asking a company to place $9 billion dollars in some sort of escrow account (Valdez cost was 2 billion cleanup + 1 billion damages/compensation) would be an onerous request which would make it impossible for the company to operate. Enbridge's total equity value is only about $8 billion. Actually, those costs for Valdez were in 22 year old dollars and you want it adjusted, so probably add another billion or so. In any event, it's simply not reasonable nothing short of an act of war is likely to harm such a tanker.

Edited August 6, 2012 by Argus

[waldo]

Governments are more supportive of fossil fuel subsidies

attaboy... please speak to TimG about the reality of fossil-fuel subsidies, hey? While you're at it, don't hesitate to actually qualify your own stated, 'large return on government fossil-fuel subsidy investment'... a fully qualified investment return per subsidy dollar invested, hey?

[TimG]

Why can't it buy shares and give them over to the Natives?

Why should they? Enbridge has many business activities that do not depend on NG. The native groups not entitled to share in the revenue from those activities. It would be unfair to existing shareholders and possibly breach securities laws.

Embridge uses ownership because it is means the native owners share the risk as well as the reward. It is unreasonable for natives to expect large upfront cash payments that are not connected to success or failure of the venture.

Edited August 6, 2012 by TimG

[WWWTT]

You do realize that ethanol has been causing more and more hunger and starvation, as land and crops like corn are used for ethanol production instead of food?

I am only using Brazil as an example for pro infrastructure investment.

If you want to debate the ethics of ethanol use then start a thread about it.

WWWTT

[TimG]

Governments are more supportive of fossil fuel subsidies because that industry actually makes them a substantial amount of money. There is a large return on their investment. Not so with so-called renewable energy. It's basically like throwing money down a hole.

This entire tax subsidy issue is made complicated because many of the enviro-yahoos don't understand accounting principals and think that any deduction is automatically a 'subsidy'.

[waldo]

This entire tax subsidy issue is made complicated because many of the enviro-yahoos don't understand accounting principals and think that any deduction is automatically a 'subsidy'.

speak to the WTO hand, hey?

[WWWTT]

Oil is a fungible commodity. There is ZERO benefit to be gained by spending more money to build a longer pipeline to Ontario.

Oil companies are NOT subsidized.

Ya I don't agree with either of these comments.

WWWTT

[Wild Bill]

I am only using Brazil as an example for pro infrastructure investment.

If you want to debate the ethics of ethanol use then start a thread about it.

WWWTT

I only mentioned it to show that as one of your examples it had a lot of baggage that could make it a non-viable one.